José Corporation realized $600,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales,payroll,and property among the states include the following. Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Question

José Corporation realized $600,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales,payroll,and property among the states include the following.  Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Quizplus · Accepted Answer

Since State Z utilizes a double-weighted sales factor, sales carry more weight in the apportionment formula. The sales factor is calculated as follows:
(State Z sales / Total sales) x 2 = (200,000 / 400,000) x 2 = 1
Therefore, all of the taxable income is apportioned to State Z.
$600,000 taxable income x 100% apportionment factor to State Z = $600,000 apportioned to State Z.
The answer is B.

José Corporation Realized $600,000 Taxable Income from the Sales of Its